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“Time inconsistency”: the Phillips curve example, an analysis for intermediate macroeconomics

Philippine Review of Economics

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Title “Time inconsistency”: the Phillips curve example, an analysis for intermediate macroeconomics
 
Creator Natividad-Carlos, Fidelina; University of the Philippines School of Economics
 
Subject Philips curve, aggregate supply, time inconsistency, dynamic inconsistency, short-run optimal policy, long-run optimal policy, rational expectations, rules versus discretion
 
Description This paper provides the algebra and a panel diagram to attempt to examine the so-called inflation unemployment (or Phillips curve, or aggregate supply) example, the most popular example in the literature when introducing the concept of “time inconsistency” or “dynamic inconsistency.” The resulting panel diagram, along with the derivations presented in the appendices, is used to analyze the different possible outcomes, depending on the scenarios–rule or pre-commitment, cheating, and equilibrium–and find out whether there is indeed “time inconsistency” or “dynamic inconsistency” in the said example.JEL classification : E31, E52, E61
 
Publisher Philippine Review of Economics
 
Contributor
 
Date 2016-11-02
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Identifier http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/938
 
Source Philippine Review of Economics; Vol 53, No 1 (2016); 97-126
1655-1516
 
Language en
 
Rights Copyright (c) 2017 Philippine Review of Economics